NEW-YORK (Bloomberg) — Royal Dutch Shell has backed out of plans to buy a stake in Kazakh state-run oil and gas company KazMunayGas (KMG), Bloomberg reported on October 9, citing three anonymous sources familiar with the matter.

The decision came following a due diligence process which included discussions on corruption risks at the company involving the informal control over the company exercised by Kazakh President Nursultan Nazarbayev’s son-in-law, Timur Kulibayev. Shell’s decision to drop the plans for the purchase may not reflect well on Kazakhstan’s plans to float the company on international markets. Kazakhstan intends to sell small stakes in some of its largest state run companies ahead of its planned IPOs for 2018-2020 in order to make the companies more attractive to foreign investors. In this case, Shell decided to help KMG improve its corporate governance instead of taking a small advance stake.

Timur Kulibayev

Timur Asqaruly Kulibayev (52) is a business oligarch. He has held several positions in important state-owned enterprises that manage Kazakhstan’s natural resources, and has immense influence over the country’s hydrocarbon industry. As of October 2017, he was listed as the third richest man in Kazakhstan and the 973^rd richest in the world with a fortune of $2.3 bln.

Kulibayev, who left his post as first vice president of KMG in 2005, is still believed to hold links to the company via the KazEnergy association that works with the Kazakh government and his stake in KazStroyService, an energy services company that built a 644-km pipeline for KMG in 2013-2014, according to the report.

Earlier this month, the Shell and Eni-led consortium of energy companies operating Kazakhstan’s giant Karachaganak gas condensate field announced it would pay $1.1 bln to settle a long-running profit-sharing dispute. The company also has a stake in Kazakhstan’s giant Kashagan oil field.